Fannie Mae (FNM) and Freddie Mac (FRE) once again extended their freeze on evictions - this time through the end of February - to give loan servicers more time to help financially strapped borrowers avoid foreclosure.

Freddie Mac also announced a new program to grant month-to-month leases to certain former owner-occupants and tenants of foreclosed properties.

The new moves, announced by the companies Friday, are the latest steps by the mortgage giants to aid the housing market since they were seized by the government in September.

Fannie spokesman Brian Faith said the company would soon roll out new programs to allow renters of foreclosed properties in its inventory to convert to owners. Fannie is also working on new initiatives to help homeowners facing foreclosure, he said.

Freddie CEO David Moffett said the company's new rental program aims to soften the blow of foreclosure for residents. However, he said it could aid the broader economy.

"Keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market," he said in a statement.

Freddie spokesman Brad German said the new program could help several thousands of families avoid eviction. There are currently 8,600 foreclosures in Freddie's pipeline.

Under the program, tenants and former owners must demonstrate they have the income to pay the monthly rent. Only homes that can be brought into compliance with building codes without too much cost would qualify.

Freddie would hire property managers to run the program and to determine the market rental rates charged to former owner-occupants. Current tenants would be charged the market rate or the amount they were paying prior to foreclosure, whichever is lower.

Fannie Mae launched a similar rental program this month, though it is limited to existing tenants, rather than former owner-occupants, of foreclosed properties.

The mortgage giants were brought under government control in September in efforts to bolster the ailing mortgage market battered by souring home loans and falling residential real estate prices.

Fannie and Freddie buy mortgages from the lenders that originate the loans. They package the loans into securities and sell many of those securities to other investors.

In November, both companies first suspended foreclosure sales until the end of the year and earlier this month extended the program for an additional month.

The latest suspension applies to single-family properties with Fannie or Freddie-owned mortgages through Feb. 28.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com

-By Lauren Pollack, Dow Jones Newswires; 201-938-5964; lauran.pollack@dowjones.com

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